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Wednesday, November 08, 2017

Mauricio Macri (who is currently in New York) called on Donald Trump to impose a full embargo on Venezuelan exports to the United States. And there's more: he says it would have broad support across Latin America.

“I think we should go to a full oil embargo,” Mr Macri said. “Things have gotten worse and worse. Now, it’s really a painful situation. Poverty is going up every day, sanitary conditions are getting worse every day.”

The Argentine president is the first Latin American leader to openly advocate such as tough step. But Mr Macri, a centre-right politician who has succeeded in transforming Argentina from an international pariah to one of Latin America’s emerging starlets, said there would be “broad support” across the region for such a draconian measure, despite the hardship it would entail.

“We have been talking about this many times with many people over the past month,” he told the FT.

I urge the Department to continue targeting Venezuela's state-owned oil company, Petroleos de Venezuela, S.A. (PDVSA), and consider banning the import of Venezuelan crude to the United States until constitutional order has been restored in Venezuela.

There's a lot going on here. Here are some key points to keep in mind.

First, this will do serious damage to the U.S. economy (though not as much to Florida and not at all to Argentina!). Gas prices will shoot up and oil-related jobs will evaporate. Self-inflicted wounds are the worst kind.

Second, I do not believe this would have broad support around Latin America. In fact, it is exactly the kind of unilateral policy that isolated the U.S. from the region with regard to Cuba. To repeat, the embargo has not isolated Cuba, nor will it isolate Venezuela unless the sanctions are multilateral. That would mean no Latin American country buys the oil--I didn't hear Macri saying anything about Argentina's role. It is a bad idea for the U.S. to engage in unilateral sanctions like this.

Third, it will greatly strengthen Russia's and China's position with Venezuela, just as the Cuba embargo accelerated and deepened Cuba's dependence on the Soviet Union. Again, a self-inflicted wound. (Update:Russia is right in there helping Venezuela ease its debt burden).

I tend to doubt that Trump cares enough about Venezuela to accept the risks, assuming he fully understands them. He would likely face an intense (even bigly) backlash at a time when his approval ratings are already terrible.